-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ox4orviiPcVu4rKYPL8GoMz8RcQAPaNFlF0aDkKGcufwI/pyPLg0uty1d1tPinqa rycXhICbFpXju/6ZhoQgRA== 0001013680-99-000032.txt : 19990518 0001013680-99-000032.hdr.sgml : 19990518 ACCESSION NUMBER: 0001013680-99-000032 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FC BANC CORP CENTRAL INDEX KEY: 0000893539 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 341718070 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-25616 FILM NUMBER: 99625394 BUSINESS ADDRESS: STREET 1: FARMERS CITIZENS BANK BLDG STREET 2: 105 WASHINGTON SQ BOX 567 CITY: BUCYRUS STATE: OH ZIP: 44820 BUSINESS PHONE: 4195627040 10QSB 1 U.S. SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-QSB (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1999. [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM _______TO_______ Commission file number - 33-53596 FC BANC CORP. ----------------------------------- (Exact name of small business issuer as specified in its charter) OHIO 34-1718070 ------------------------------- ----------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Farmers Citizens Bank Building, 105 Washington Square Box 567, Bucyrus, Ohio 44820-0567 --------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (419) 562-7040 -------------- (Issuer's telephone number) N/A --- (Former name, former address and former fiscal year, if changed since last report) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . . . ---- As of April 30, 1999, 633,617 shares of Common Stock of the Registrant were outstanding. There were no preferred shares outstanding. FC BANC CORP. BUCYRUS, OHIO FORM 10-QSB INDEX ================================================================================ Page Number PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed consolidated balance sheets -- 3 March 31, 1999 and December 31, 1998 Condensed consolidated statements of income -- 4 Three months ended March 31, 1999 and 1998 Condensed consolidated statements of changes in 5 shareholders' equity -- Three months ended March 31, 1999 and year ended December 31, 1998 Condensed consolidated statement of cash flows -- 6 Three months ended March 31, 1999 and 1998 Notes to condensed consolidated financial statements -- 7 March 31, 1999 and December 31, 1998 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 10 PART II OTHER INFORMATION Item 1. Legal Proceedings 15 Item 2. Changes in Securities 15 Item 3. Defaults upon Senior Securities 15 Item 4. Submission of Matters to a Vote of Security Holders 15 Item 5. Other Information 16 Item 6. Exhibits and Reports on Form 8-K 16 Signatures 16
FC BANC CORP, INC. BUCYRUS, OHIO CONSOLIDATED BALANCE SHEETS ================================================================================ (Dollars in thousands) (Unaudited) At March 31, At December 31, ------------ --------------- 1999 1998 ---- ---- ASSETS Cash and cash equivalents: Cash and amounts due from banks $ 2,631 $ 3,964 Interest-bearing demand deposits in other banks 6 5 Federal funds sold 300 3,500 -------- -------- Total cash and cash equivalents 2,937 7,469 Investment securities, available-for-sale 37,644 37,319 Loans 47,722 45,649 Allowance for loan losses (1,702) (1,725) -------- -------- Net Loans 46,020 43,924 Premises and equipment 1,661 1,489 Accrued interest receivable 844 711 Cash surrender value of life insurance 2,924 2,385 Deferred income taxes 320 316 Other assets 154 72 ------- ------- TOTAL ASSETS $92,504 $93,685 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits Noninterest-bearing 9,679 10,517 Interest-bearing 70,378 70,794 ------- ------- Total deposits 80,057 81,311 ------- ------- Borrowed funds 0 0 Accrued interest payable 156 188 Other liabilities 543 639 ------- ------- TOTAL LIABILITIES 80,756 82,138 SHAREHOLDERS' EQUITY Preferred shares of $25 par value; 750 authorized; none issued 0 0 Common shares, no par value; 4,000,000 shares authorized; 665,632 shares issued 832 832 Additional paid-in capital 1,370 1,370 Retained earnings 10,320 10,079 Treasury shares, at cost (721) (685) Accumulated other comprehensive income (53) (49) ------- ------- TOTAL SHAREHOLDERS' EQUITY 11,748 11,547 ------- ------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $92,504 $93,685 ======= =======
- -------------------------------------------------------------------------------- See accompanying notes
FC BANC CORP, INC. BUCYRUS, OHIO CONSOLIDATED STATEMENTS OF INCOME ================================================================================ (Dollars in thousands) (Unaudited) (Unaudited) 3 Months Ended 3 Months Ended March 31, March 31, --------- --------- 1999 1998 ---- ---- INTEREST INCOME Interest and fees on loans $1,052 $ 982 Interest and dividends on investment securities 508 483 Interest on federal funds sold 21 29 Interest on bank deposits 0 0 ------ ------ TOTAL INTEREST INCOME 1,581 1,494 ------ ------ INTEREST EXPENSE Interest on deposits 616 604 Interest on borrowed funds 0 0 ------ ------ TOTAL INTEREST EXPENSE 616 604 ------ ------ NET INTEREST INCOME 965 890 Provision for loan losses (25) 0 ------ ------ NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 990 890 OTHER INCOME Service charges 110 107 Gains from sales of investment securities, net 0 4 Life insurance buildup 35 17 Other income 11 3 ------ ------ TOTAL OTHER INCOME 156 131 OTHER EXPENSES Salaries and employee benefits 379 331 Net occupancy and equipment expenses 166 138 Advertising and public relations 35 20 Directors' fees 19 17 Legal and professional 37 45 State taxes 40 40 Supplies 25 40 Other expenses 124 102 ------ ------ TOTAL OTHER EXPENSES 825 733 ------ ------ NET INCOME BEFORE FEDERAL INCOME TAX EXPENSE 321 288 Federal income tax expense 80 68 ------ ------ NET INCOME $ 241 $ 220 ====== ====== EARNINGS PER SHARE: Earnings per common share - basic $0.38 $0.34 Earnings per common share - diluted $0.37 $0.34
- -------------------------------------------------------------------------------- See accompanying notes FC BANC CORP, INC. BUCYRUS, OHIO CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Dollars in thousands) Number of Shares Amounts --------------------------- ----------------------------------------------------------- Accumulated Additional Other Compre- Common Treasury Common Paid-In Retained Treasury Comprehensive hensive Stock Stock Stock Capital Earnings Stock Income Income ----- ----- ----- ------- -------- ----- ------ ------ Balance at December 31, 1997 665,632 23,256 $832 $1,370 $ 9,461 $(484) $16 Net Income 1,001 $1,001 Other comprehensive income Change in unrealized gain (loss) on securities available-for-sale, net of deferred income tax of $31 (65) (65) ----- Comprehensive income $ 936 ===== Dividends declared-common ($0.60) per shares (383) Purchase of 7,447 common shares 7,447 (201) ------- ------- ------ ------ ------ ------ ------ Balance at December 31, 1998 665,632 30,703 832 1,370 10,079 (685) (49) Net Income 241 $ 241 Other comprehensive income Change in unrealized gain (loss) on securities available-for-sale, net of deferred income tax of $2 (4) (4) ----- Comprehensive income $ 237 ===== Purchase of 1,312 common shares 1,312 (36) ------- ------ ------ ------ ------- ------ ----- Balances at March 31, 1999 665,632 32,015 $ 832 $1,370 $10,320 $(721) $(53) ======= ====== ====== ====== ======= ====== =====
- ------------------------------------------------------------------------------- See accompanying notes
FC BANC CORP, INC. BUCYRUS, OHIO CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) (Unaudited) (Unaudited) 3 Months Ended 3 Months Ended March 31, March 31, -------- --------- 1999 1998 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 241 $ 220 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses (25) 0 Loss on sales of available-for-sale securities, net 0 (4) Income accrued on life insurance contracts (35) (17) Depreciation 95 69 Deferred income taxes 1 (20) Investment securities amortization (accretion), net 57 3 Net change in: Accrued interest receivable (132) 6 Accrued interest payable (32) (10) Other assets (81) (178) Other liabilities (97) 315 ------- ------ Net cash provided by (used in) operating activities (10) 384 ------- ------ CASH FLOWS FROM INVESTING ACTIVITIES Purchases of securities available-for-sale (3,924) (8,602) Proceeds from sales of securities available-for-sale 0 3,514 Proceeds from maturities of securities available-for-sale 3,535 496 Purchase of loans 0 0 Net decrease in loans (2,072) (1,845) Purchase of premises and equipment (267) (39) Purchase of life insurance contracts (505) 0 ------ ------ Net cash used in investing activities (3,233) (6,476) ------ ------ CASH FLOWS FROM FINANCING ACTIVITIES: Net increase (decrease) in: Noninterest-bearing, interest bearing, demand, and savings deposits (2,185) 4,979 Certificates of deposit 932 3,542 Net increase (decrease) in short-term borrowed funds 0 (600) Proceeds from note payable 0 0 Payments on note payable 0 0 Purchase of treasury stock (36) (1) Cash dividends paid 0 0 ------ ------ Net cash provided by (used in) financing activities (1,289) 7,920 ------ ------ NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (4,532) 1,828 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,469 3,567 ------ ------ CASH AND CASH EQUIVALENTS AT END OF PERIOD $2,937 $5,395 ====== ====== SUPPLEMENTAL DISCLOSURES Cash paid during the year for interest $ 648 $ 614 Cash paid during the year for income taxes 171 62
- -------------------------------------------------------------------------------- See accompanying notes FC BANC CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS March 31, 1999, and December 31,1998 (Unaudited) ================================================================================ NOTE 1. BASIS OF PRESENTATION In the opinion of Management, the accompanying unaudited consolidated financial statements contain all adjustments necessary for a fair presentation of FC Banc Corp.'s ("Company" or "Bancorp") financial position as of March 31, 1999, and December 31, 1998, and the results of operations for the three months ended March 31, 1999 and 1998, and the cash flows for the three months ended March 31, 1999 and 1998. Certain information and note disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted pursuant to the rules and regulations of the Securities and Exchange Commission. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB. The results of operations for the three months ended March 31, 1999, are not necessarily indicative of the results which may be expected for the entire fiscal year. NOTE 2. ALLOWANCE FOR LOAN LOSSES Activity in the allowance for loan losses is summarized as follows: (Dollars in thousands) Three months ended Year ended March 31, December 31, 1999 1998 ---- ---- Balance, beginning of period $1,725 $1,480 Provision for loan losses (25) (75) Recoveries 31 379 Charge-offs (29) (59) ------ ------ Balance, end of period $1,702 $1,725 ====== ====== NOTE 3. REGULATORY CAPITAL The following table illustrates the compliance by the Bank with currently applicable regulatory capital requirements at March 31, 1999.
(Dollars in thousands) Categorized as "Well" Capitalized" Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provision ------ ----------------- ---------------- Amount Ratio Amount Ratio Amount Ratio ------ ----- ------ ----- ------ ----- Total Risk-Based Capital (To Risk-Weighted Assets) $12,427 23.15% $4,294 8.00% $5,367 10.00% Tier I Capital (To Risk-Weighted Assets) 11,743 21.88% 2,147 4.00% 3,220 6.00% Tier I Capital (To Total Assets) 11,743 12.68% 3,704 4.00% 4,630 5.00% Tangible Capital (To Total Assets) 11,743 12.68% 3,704 4.00% N/A N/A NOTE 4. EARNINGS PER SHARE Earnings per share ("EPS") is computed in accordance with Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share," which was adopted by the Company as of December 31, 1997. Common stock equivalents include shares granted under the Stock Option Plan ("SOP"). Following is a reconciliation of the numerators and denominators of the basic and diluted EPS calculations.
For the Three Months Ended March 31, 1999 ----------------------------------------- Income Shares Per Share (Numerator) (Denominator) Amount ----------- ------------- ------ Basic EPS Income available to common shareholders $241,454 634,367 $0.38 Effect of dilutive securities: None 9,512 ($0.01) -------- ------- ----- Diluted EPS Income available to common shareholders + assumed conversions $241,454 643,879 $0.37 ======== ======= =====
For the Three Months Ended March 31, 1998 ----------------------------------------- Income Shares Per Share (Numerator) (Denominator) Amount ----------- ------------- ------ Basic EPS Income available to common shareholders $219,608 653,564 $0.34 Effect of dilutive securities: None 0 $0.00 -------- ------- ----- Diluted EPS Income available to common shareholders + assumed conversions $219,608 653,564 $0.34 ======== ======= =====
NOTE 5. RECLASSIFICATIONS Certain amounts in the prior period's financial statements have been reclassified to be consistent with the current period's presentation. The reclassifications have no effect on net income. FC BANC CORP. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ============================================================================== Safe Harbor Clause This report contains certain "forward-looking statements." The Company desires to take advantage of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 and is including this statement for the express purpose of availing itself of the protection of such safe harbor with respect to all such forward-looking statements. These forward-looking statements, which are included in Management's Discussion and Analysis, describe future plans or strategies and include the Company's expectations of future financial results. The words "believe," "expect," "anticipate," "estimate," "project," and similar expressions identify forward-looking statements. The Company's ability to predict results or the effect of future plans or strategies is inherently uncertain. Factors which could affect actual results include interest rate trends, the general economic climate in the Company's market area and the country as a whole, loan delinquency rates, and changes in federal and state regulations. These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements. General The Company is a bank holding company whose activities are primarily limited to holding the stock of The Farmers Citizens Bank, Bucyrus, Ohio, ("Bank"). The Bank conducts a general banking business in northwest Ohio which consists of attracting deposits from the general public and applying those funds to the origination of loans for residential, consumer and non-residential purposes. The Bank's profitability is significantly dependent on net interest income which is the difference between interest income generated from interest-earning assets (i.e., loans and investments) and the interest expense paid on interest-bearing liabilities (i.e., customer deposits and borrowed funds). Net interest income is affected by the relative amount of interest-earning assets and interest-bearing liabilities and interest received or paid on these balances. The level of interest rates paid or received by the Bank can be significantly influenced by a number of environmental factors, such as governmental monetary policy, that are outside of management control. Earnings per common share were computed by dividing net income by the weighted-average number of shares outstanding for the three-month periods ended March 31, 1999 and 1998. Prior period earnings per share calculations were restated to reflect the one-for-one stock split which was effective August 14, 1998. The consolidated financial information presented herein has been prepared in accordance with generally accepted accounting principles ("GAAP") and general accounting practices within the financial services industry. In preparing consolidated financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from such estimates. The Company is subject to regulation by the Board of Governors of the Federal Reserve System which limits the activities in which the Company and the Bank may engage. The Bank is supervised by the State of Ohio, Division of Financial Institutions and its deposits are insured up to applicable limits under the Bank Insurance Fund ("BIF") of the Federal Deposit Insurance Corporation ("FDIC"). The Bank is a member of the Federal Reserve System and is subject to its supervision. The Company and the Bank must file with the U.S. Securities and Exchange Commission, the Federal Reserve Board and Ohio Division of Financial Institutions the prescribed periodic reports containing full and accurate statements of its affairs. The Bank conducts its business through its four offices located in Crawford and Morrow Counties, Ohio. The primary market area of the Bank is Crawford and Morrow and contiguous counties in northwest central Ohio. Year 2000 Readiness The Year 2000 problem was created by computer programmers in the 1950's. In order to save money and storage space, they used two digit date fields to represent Year information. They anticipated that systems would be obsolete by the Year 2000. Instead of writing new programs and fixing the problem, the old programs were modified. Thus, some truncated fields may not work with dates beyond 1999. Correct processing of date oriented information is critical to the operation of all financial institutions. Failure of these processes could severely hinder the ability to continue operations and provide customer service. Because of the critical nature of the issue, the Company established a committee in the third quarter of 1997 to address "Year 2000" issues. The core data processing software used by the Company and Bank was purchased from a nationally known software vendor. They are completely aware of the potential problems, and have made it a part of their maintenance cycle to handle the Year 2000. Their software was designed to process calendar year calculations using all four date digits. For display or report purposes, two digit dates are sometimes displayed or represented. No calculations are performed using two digit date codes. The federal regulatory agencies that regulate the Company an Bank have instituted mandatory interagency guidelines establishing Year 2000 standards for safety and soundness in order to ensure Year 2000 compliance by financial institutions. The federal banking regulatory agencies are overseeing this effort and are examining financial institutions periodically to track their Year 2000 compliance progress. The Company and Bank are working to satisfy the regulatory guidelines but there can be no assurance that all interim milestones will be met. However, management believes that the Company and Bank will be substantially compliant with Year 2000 guidelines. Our Company is fully committed to addressing the Year 2000 problem. Our goal is to ensure that our systems will handle the new century date change smoothly so that our customers will not be inconvenienced. We are identifying relevant systems; repairing, replacing, or upgrading systems to resolve potential problems; and testing systems for Year 2000 compatibility. We are also working closely with our third-party service providers to monitor their readiness for Year 2000. Management has been assured by their software vendors that any program changes necessary to ensure Year 2000 compliance will be completed in adequate time to prevent any foreseeable processing problems. We have substantially completed the testing and plan to have all system changes implemented by June 30, 1999, as required by federal bank regulators. We will have alternative methods of doing business as a contingency should problems occur. The Company's Business Resumption Contingency Planning Policy was completed in prior to March 31, 1999. The policy identifies key milestones and includes information collection tools, establishes a reporting system and details work plans which are essential to the drafting of the appropriate contingency plans. The contingency plans will address actions to be taken to continue operations in the event of system failure due to areas that cannot be tested in advance, such as power and telephone service, which are vital to business continuation. All personal computers ("PCs") and related software throughout the Company have been inventoried and tested for Year 2000 capabilities. The Company is using two testing methods for PC certification of Year 2000 compatibility. PCs must pass both tests to be considered ready for Year 2000. Those PCs identified as non-Year 2000 compatible will be modified or replaced . The Company believes that the Year 2000 issue will not pose significant operational problems and is not anticipated to be material to its financial position or results of operation in any given year. As of March 31, 1999, the Company had budgeted $202,000 for estimated Year 2000 implementation costs. Thus far, the Company has incurred approximately $65,000 of related Y2K expenses and management anticipates that total costs will not exceed the budgeted amount. The remaining costs are expected to be expensed over the next 9 to 12 months, impacting fiscal years ending December 31, 1999 and 2000. This estimate is based on information available at March 31, 1999, and may be revised as additional information and actual costs become available. Currently, customer awareness is one of the most critical; areas of the Y2K Project. Management has been providing ongoing training to our staff in am effort to prepare them to answer customer questions and concerns relative to Y2K and its effect on them and their businesses. All employees have been provided with various literature and other information to inform and educate our customers. A committee has been formed comprised of representatives from each of the local financial institutions in order to assume the community that we are united in dealing with Y2K issues and concerns. Changes in Financial Condition At March 31, 1999, the consolidated assets of the Company totaled $92.5 million, a decrease of $1.2 million, or 1.26%, from $93.7 million at December 31, 1998. The decrease in total assets was primarily the result of a $1.2 million decrease in deposits which were invested as federal funds sold. Net loans receivable increased by $2.1 million, or 4.77%, to $46.0 million at March 31, 1999, compared to $43.9 million at December 31, 1998. The increase was primarily in the real estate related loan portfolio where the new loan demand continued to exceed loan repayments. Investment securities were relatively stable during the first three months of 1999. The increase of $325,000, or 0.87%, from $37.3 million at December 31, 1998, to $37.6 million at March 31, 1999, was primarily the result of the reallocation of funds from maturing securities. Federal funds sold, which decreased $3.2 million during the first three months of 1999, were primarily employed to fund the increased demand for loans. Deposit liabilities decreased $1.2 million, or 1.54%, from $81.3 million at December 31, 1998, to $80.1 million at September 30, 1998. Management attributes the majority of the decrease to the competitive rate structure in the market area. Total shareholders' equity increased $201,000, or 1.74%, from $11.5 million at December 31, 1998, to $11.7 million at March 31, 1999. This increase was primarily the result of $241,000 in earnings for the first three months being offset by the acquisition of 1,312 shares of treasury stock, $36,000, and a slight decrease in other comprehensive income (unrealized losses on securities available-for-sale) of $4,000 during the three months ended March 31, 1999. The Bank's liquidity, primarily represented by cash and cash equivalents, is a result of its operating, investing and financing activities. Principal sources of funds are deposits, loan and mortgage-backed security repayments, maturities of securities and other funds provided by operations. The Bank also has the ability to borrow from the Federal Home Bank of Cincinnati ("FHLB") as well as the Federal Reserve Bank of Cleveland ("FRB"or "Fed"). While scheduled loan repayments and maturing investments are relatively predictable, deposit flows and early loan and mortgage-backed security prepayments are more influenced by interest rates, general economic conditions and competition. The Bank maintains investments in liquid assets based upon management's assessment of (i) the need for funds, (ii) expected deposit flows, (iii) the yields available on short-term liquid assets and (iv) the objectives of the asset/liability management program. In the ordinary course of business, part of such liquid investments portfolio is composed of deposits at correspondent banks. Although the amount on deposit at such banks often exceeds the $100,000 limit covered by FDIC insurance, the Bank monitors the capital of such institutions to ensure that such deposits do not expose the Bank to undue risk of loss. The Asset/Liability Management Committee of the Bank is responsible for liquidity management. This committee, which is comprised of various managers, has an Asset/Liability Policy that covers all assets and liabilities, as well as off-balance sheet items that are potential sources and uses of liquidity. The Bank's liquidity management objective is to maintain the ability to meet commitments to fund loans and to purchase securities, as well as to repay deposits and other liabilities in accordance with their terms. The Bank's overall approach to liquidity management is to ensure that sources of liquidity are sufficient in amounts and diversity to accommodate changes in loan demand and deposit fluctuations without a material adverse impact on net income. The Committee monitors the Bank's liquidity needs on an ongoing basis. Currently the Bank has several sources available for both short- and long-term liquidity needs. These include, but are not restricted to advances from the FHLB, Federal Funds and borrowings from the Fed and other correspondent banking arrangements. The Bank is subject to various regulatory capital requirements administered by its primary federal regulator, the FRB. Failure to meet minimum capital requirements can initiate certain mandatory, and possible additional discretionary actions by regulators that, if undertaken, could have a material affect on the Company and the consolidated financial statements. Under the regulatory capital adequacy guidelines and the regulatory framework for prompt corrective action, the Bank must meet specific capital guidelines that involve quantitative measures of the Bank's assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank's capital amounts and classification under the prompt corrective action guidelines are also subject to qualitative judgements by the regulators about components, risk weighing, and other factors. Qualitative measures established by the regulation to ensure capital adequacy requires the Bank to maintain minimum amounts and ratios of: total risk-based capital and Tier I capital to risk-weighted assets (as defined by the regulations), and Tier I capital to average assets (as defined). Management believes, as of March 31, 1999, that the Bank meets all of the capital adequacy requirements to which it is subject. As of December 31, 1998, the most recent notification from the FDIC, the Bank was categorized as well capitalized under the regulatory framework for prompt corrective action. To remain categorized as well capitalized, the Bank will have to maintain minimum total risk-based, Tier I risk-based, and Tier I leverage ratios as disclosed in Note 3 - Regulatory Capital. There are no conditions or events since the most recent notification that management believes have changed the Bank's prompt corrective action category. At March 31, 1999, FC Banc Corp. had approximately $254,000 in commitments for capital expenditures. Results of Operations Comparison of Three Months Ended March 31, 1999 and 1998 General. Net income increased during the first quarter of 1999 as compared to the same three month period ended March 31, 1998. Net income amounted to $241,000 versus $220,000, an increase of $21,000, or 9.55%. This increase was primarily attributed to an increase in net interest income, a negative provision for possible loan losses and the cash surrender values buildup of life insurance policies. These increases were offset by increases in salary and benefit costs, occupancy and equipment expenses and other general operating expenses. Interest Income. The rapid increase in average earning assets was the primary contributing factor to the net increase in interest income of $87,000, or 5.82%, for the three months ended March 31, 1999 compared to 1998. The increase was attributed to the additional loan interest and fee income of $70,000 resulting primarily from an increase in loans receivable and a $25,000 increase in investment income which was partially off-set by a $8,000 decrease in income from federal funds sold. These increases were off-set by the $12,000 increase in interest expense. Interest Expense. Interest expense on deposit liabilities increased $12,000 for the three months ended March 31, 1999, as compared to the same period in 1998. Total deposits increased by $1.3 million comparing March 31, 1999, to 1998, the average cost of funds for the first three months of 1999 was 3.13%, as compared to 3.53% for the same period in 1998. Provision for Loan Losses. There were net recoveries of $2,000 during the three months ended March 31, 1999, compared to net recoveries of $102,000 during the same period in 1998. There was a negative provision for loan losses during the first quarter in 1999 compared to no provision during the same period ending March 31, 1998. The negative provision was based upon the results of the ongoing loan reviews and composition of the loan portfolio, primarily loans secured by one- to four-family residential properties and other forms of collateral, which are considered to have less risk. Non-Interest Income. Non-interest income increased $25,000, or 19.08%, to $156,000 for the three months ended March 31, 1999, from $131,000 for the three months ended March 31, 1998. The increase was primarily attributable to a $18,000 increase in cash surrender values of life insurance contracts and $8,000 increase in other miscellaneous charges. There were no security gains or losses recognized during the three month period ended March 31, 1999, as compared to $4,000 in gains recognized on the sale of other investment securities during the period ended March 31, 1998. Non-Interest Expense. Non-interest expense increased $92,000, or 12.55%, to $825,000 for the three months ended March 31, 1999, from $733,000 in the comparable period in 1998. Of this increase, $48,000 was attributable to an increase in compensation and benefit expense in 1999, reflecting normal salary benefit adjustments. Net occupancy and equipment expense increased $28,000, or 20.29%, to $166,000 for the three months ended March 31, 1999, as compared to the same period in 1998. The ratio of non-interest expense to average total assets was 0.89% and 0.90% for the three months ended March 31, 1999 and 1998, respectively. Income Taxes. The provision for income taxes increased $12,000 for the three months ended March 31, 1999, compared with the prior year, primarily as a result of higher taxable income for the quarter. FC BANC CORP. PART II - OTHER INFORMATION ================================================================================ ITEM 1 - LEGAL PROCEEDINGS Not Applicable ITEM 2 - CHANGES IN SECURITIES Not Applicable ITEM 3 - DEFAULTS UPON SENIOR SECURITIES Not Applicable ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS On March 24, 1999, the Corporation held its Annual Meeting of Shareholders. Each of the three directors nominated were elected to terms of three (3) years expiring in 2002 by the following votes: Samuel J. Harvey For: 443,268 Withheld: 10,734 Abstain: 0 ------- ------ --- Charles W. Kimerline For: 448,974 Withheld: 5,028 Abstain: 0 ------- ----- --- James B. Pigman For: 446,964 Withheld: 7,038 Abstain: 0 ------- ----- --- Three other matters were submitted to the shareholders, for which the following votes were cast: 2. Approval of the amendment to the Articles of Incorporation of FC Banc Corp. to increase authorized common stock, without par value, from 1,000,000 to 4,000,000 shares: For: 395,694 Against: 44,214 Abstain: 14,094 ------- ------ ------ 3. Approval of the amendment to the Code of Regulations, Article 2, Section, 2.10 to change the circumstances under which directors may be removed and the procedures for removal of a director: For: 421,690 Against: 5,650 Abstain: 26,662 ------- ----- ------ 4. Ratification of the selection of Robb, Dixon, Francis, Davis, Oneson & Company as the auditors of FC Banc Corp. for the current year: For: 450,760 Against: 52 Abstain: 3,234 ------- ----- ----- ITEM 5 - OTHER INFORMATION Not Applicable ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K a. Exhibit 27: Financial Data Schedule b. A report on Form 8-K was filed on March 24, 1999 announcing the commencement of a stock repurchase program to acquire up to 31,111 common shares. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized. FC BANC CORP May 14, 1999 /s/ G.W. Holden - -------------------------------- ------------------------------- Date G. W. Holden President and Chief Executive Officer May 14, 1999 /s/ Jeffrey Wise - -------------------------------- ------------------------------- Date Jeffrey Wise Principal Financial Officer EX-27 2
9 The schedule contains summary financial information extracted from the Consolidated Balance Sheets as of March 31, 1999, and December 31, 1998, and the related Consolidated Statements of Income for the three months ended March 31, 1999 and 1998, and is qualified in its entirety by reference to such financial statements. 0000893539 FC BANC CORP 1,000 US DOLLARS 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 1 2,631 6 300 0 37,644 0 0 47,722 1,702 92,504 80,057 0 699 0 0 0 832 10,916 92,504 1,052 508 21 1,581 616 616 965 (25) 0 825 321 241 0 0 241 0.38 0.37 4.29 0 0 0 0 1,725 29 31 1,702 1,702 0 59
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